Leeds Building Society has become the first mortgage lender to refuse loans to those who wish to buy second homes.
The announcement, by Leeds Building Society chief executive, Richard Fearon, is a rare move by a lender; they do not normally make public statements about their lending policies.
Leeds is the UK’s fifth largest building society with £19.7 billion worth of loan on its balance sheet. Its refusal to lend to those hoping to buy second homes is a significant move in the market although other lenders have yet to follow suit.
Richard Fearon, Leeds’s chief executive, said: “We don’t believe support for second homes is compatible with our purpose to put home ownership within reach of more people. Second homes reduce the number of properties available for people to live in, at a time when there’s a consensus housing supply is inadequate to meet demand.”
As property prices rise across the country, there has been a growing backlash against second home ownership. The demand for second homes in country locations has pushed up house prices beyond the means of locals, forcing first time buyers out of the area away from family and friends. While not a new phenomenon in hot spot areas such as Devon and Cornwall, the problem is spreading across the country as people look to escape the city.
If MPs back legislation going through parliament currently, English local authorities will have the power to increase council tax bills on second homes if owners use them for fewer than 70 days a year. How effective this and the move by the Leeds will be in reducing second home ownership is unknown. For the moment it is more likely to affect the Leeds balance sheet unless other lenders follow their lead and make first time buyers a priority.